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Category: Taxation

Pakistan Revenue delivers the latest taxation news, covering income tax, sales tax, and customs duty. Stay updated with insights on tax policies, regulations, and financial developments in Pakistan.

  • Sellers must retain CNIC information for six years

    Sellers must retain CNIC information for six years

    ISLAMABAD: Sales tax registered persons selling goods are required to keep record of Computerized National Identity Card (CNIC) details for six years.

    Sources in Federal Board of Revenue (FBR) said that the condition of CNIC against sales of goods had been implemented from August 01, 2019. “All the details of CNIC must be maintained by the suppliers for examination and scrutiny purposes,” a tax official said.

    Under Section 24 of the Sales Tax Act, 1990, the records and documents must be retained for six years.

    “A person, who is required to maintain any record or documents under this Act, shall retain the record and documents for a period of six years after the end of the tax period to which such record or documents relate or till such further period the final decision in any proceedings including proceedings for assessment, appeal, revision, reference, petition and any proceedings before an alternative Dispute Resolution Committee is finalized.”

    The government through Finance Act, 2019 introduced significant changes to document the supply chain and made mandatory the information of CNIC on sales under Section 23 of the Sales Tax Act, 1990.

    Section 23: Tax Invoices

    Sub-Section (1): A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely: –

    (a) name, address and registration number of the supplier;

    (b) name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

    Explanation. – For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing:

    Provided that the condition of NIC or NTN shall be effective from 1st August, 2019;

    (c) date of issue of invoice;

    (d) description including count, denier and construction in case of textile yarn and fabric, and quantity of goods;

    (e) value exclusive of tax;

    (f) amount of sales tax; and

    (g) value inclusive of tax:

    Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons;

    Provided further that not more than one tax invoice shall be issued for a taxable supply:

    Provided also that if it is subsequently proved that CNIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.

    Sub-Section (2): No person other than a registered person or a person paying retail tax shall issue an invoice under this section.

    Sub-Section (3): A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Commissioner, as may be specified.

    Sub-Section (4): The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.

  • Incomplete particulars to make furnished annual return invalid

    Incomplete particulars to make furnished annual return invalid

    KARACHI: An income tax return filed by a taxpayer will be treated as invalid if the taxpayer has failed to provide complete particulars as required in return form.

    Sources in Federal Board of Revenue (FBR) said that taxpayers should carefully make entries in income tax return form and wealth statement form before submitting.

    The sources said that Section 120(3) of Income Tax Ordinance, 2001 stated that a commissioner of Inland Revenue is required to issue a notice to person, who had filed income tax return with incomplete particulars.

    The Section 120 of the Ordinance, 2001 explained the assessment of taxpayers on the basis of submitted income and assets declaration.

    Section 120: Assessments

    Sub-Section (1): Where a taxpayer has furnished a complete return of income (other than a revised return under sub-section (6) of section 114) for a tax year ending on or after the 1st day of July, 2002,—

    (a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon, equal to those respective amounts specified in the return; and

    (b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished.

    Sub-Section (1A): Notwithstanding the provisions of sub-section (1), the Commissioner may conduct audit of the income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly.

    Sub-Section (2): A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.

    Sub-Section (3): Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice.

    Sub-Section (4): Where a taxpayer fails to fully comply, by the due date, with the requirements of the notice under sub-section (3), the return furnished shall be treated as an invalid return as if it had not been furnished.

    Sub-Section (5): Where, in response to a notice under sub-section (3), the taxpayer has, by the due date, fully complied with the requirements of the notice, the return furnished shall be treated to be complete on the day it was furnished and the provisions of sub-section (1) shall apply accordingly.

    Sub-Section (6): No notice under sub-section (3) shall be issued after the expiry of one hundred and eighty days from the end of the financial year in which return was furnished, and the provisions of sub-section (1) shall apply accordingly.

  • Importers require filing declaration within 10 days of goods arrival

    Importers require filing declaration within 10 days of goods arrival

    KARACHI: Importers are required to file goods declaration within 10 days of arrival of goods at the port of entry.

    The Federal Board of Revenue (FBR) issued Customs Act, 1969 update till June 30, 2019 incorporating changes brought through Finance Act, 2019.

    Prior to Finance Act, 2019 the importers were allowed to file goods declaration within 15 days.

    Section 79 of the Customs Act, 1969 described the filing of declaration and assessment.

    Section 79: Declaration and assessment for home consumption or warehousing or transshipment.-

    Sub-Section (1): The owner of any imported goods shall make entry of such goods for home consumption or warehousing or transshipment or for any other approved purposes, within ten days of the arrival of the goods, by,-

    (a) filing a true declaration of goods, giving therein complete and correct particulars of such goods, duly supported by commercial invoice, bill of lading or airway bill, packing list or any other document required for clearance of such goods in such form and manner as the Board may prescribe ; and

    (b) assessing and paying his liability of duty, taxes and other charges thereon, in case of a registered user of the Customs Computerized System:

    Provided that if, in case of used goods, before filing of goods declaration, the owner makes a request to an officer of customs not below the rank of an Additional Collector that he is unable, for want of full information, to make a correct and complete declaration of the goods, then such officer subject to such conditions as he may deem fit, may permit the owner to examine the goods and thereafter make entry of such goods by filing a goods declaration after having assessed and paid his liabilities of duties, taxes and other charges:

    Provided further that no goods declaration shall be filed prior to ten days of the expected time of arrival of the vessel.

    Explanation.- For the purposes of this clause, the assessment and paying of duty, taxes and other charges in respect of transshipment shall be at the port of destination.

    Sub-Section (2): If an officer, not below the rank of Additional Collector of Customs, is satisfied that the rate of customs duty is not adversely affected and that there was no intention to defraud, he may, in exceptional circumstances and for reasons to be recorded in writing, permit, substitution of a goods declaration for home consumption for a goods declaration for warehousing or vice versa.

    Sub-Section (3): An officer of Customs, not below the rank of Assistant Collector of Customs, may in case of goods requiring immediate release allow release thereof prior to presentation of a goods declaration subject to such conditions and restrictions as may be prescribed by the Board.

  • CRTO Karachi sets up monitoring cell to identify fake, flying invoices

    CRTO Karachi sets up monitoring cell to identify fake, flying invoices

    KARACHI: In order to identify taxpayers involved in fake and flying invoices, a monitoring cell has been established at Corporate Regional Tax Office (CRTO) Karachi.

    The cell has been established keeping in view the declining trend in sales tax payments during first quarter (July – September) 2019/2020.

    The monitoring cell has been assigned to identify cases involved in fake and flying invoices, fake transactions, sales suppressions and streamline tax mechanism.

    Jafar Raza Kazmi, Commissioner Inland Revenue, Zone-IV of the CRTO has been assigned to supervise the monitoring cell.

    According to a notification issued on Thursday, the cell would perform the following functions:

    — To analyze / monitor sales tax monthly sales tax returns to identify cases where action under Section 38 of the Sales Tax Act, 1990 is required to be taken on the basis of abnormalities causing huge decline in sales tax payment etc.

    — The cell shall prepare desk audit report showing details of records / data scrutinized discrepancies observed and potential revenue involved.

    — After due diligence, the cell shall take action under Section 38 of the Sales Tax Act, 1990 against the person as per law and submit the detailed report with impact of revenue to the chief commissioner CRTO Karachi.

    The monitoring cell will focus and take such cases for action under Section 38 of the Sales Tax Act, 1990, which may yield substantial revenue.

    The cell has been strictly advised that action in specific cases should be taken with reasonable interval of time. The exercise should not be made frequently and be restricted to cases involving sizeable revenue leakages.

    Section 38: Authorised officers to have access to premises, stocks, accounts and records –

    Sub-Section (1) Any officer authorised in this behalf by the Board or the Commissioner shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorised officer may deem fit against a signed receipt.

    Sub-Section (2): The registered person, his agent or any other person specified in sub-section (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorised officer.

    (3) The department of’ direct and indirect taxes or any other Government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorised officer in the course of inquiry or investigation under this section.

  • FBR launches Urdu version official website

    FBR launches Urdu version official website

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday launched its official website in national language in order to aware large population of the country to understand taxation issues.

    Chairman FBR Syed Muhammad Shabbar Zaidi inaugurated the Urdu website of FBR.

    The Urdu version of website has been launched to facilitate the taxpayers.

    Member FATE Mustafa Sajjad Hassan and Chief FATE Tehmina Aamer briefed the Chairman FBR about the features of the Urdu website.

    The senior officers of FBR HQ, Member Administration Nausheen Javed Amjad, Member IR Operations Seema Shakil, Member Customs Operations Jawwad Awais Agha, Special Assistant to Chairman Zubair Bilal were also present on the inauguration.

    The Urdu website offers online facilitation and services to the taxpayers about Income Tax, Sales Tax, Customs and FBR Maloomaat.

    The Urdu version contains special features which contain useful reservoir of information relating to taxation and customs.

    With the launch of Urdu website, the people can not only file their complaints in Urdu but can also seek responses of their queries in the national language.

    The website offers facilitation to the people to read the Tax and Customs laws and rules, SROs and Circulars in Urdu language.

    Chairman FBR appreciated the efforts of FATE Wing officers and staff who worked tirelessly to make the launch of Urdu website possible in the shortest possible time for the facilitation of the taxpayers.

    Chairman FBR stated on the inauguration that FBR will soon achieve complete automation in all areas which will certainly bring great ease for the taxpayers in future.
    Urdu website can be accessed by clicking on the Urdu button on the FBR’s website fbr.gov.pk.

    The Urdu website can also be logged into by accessing urdu.fbr.gov.pk.

  • Notices for filing income tax returns of past 10 years may be issued

    Notices for filing income tax returns of past 10 years may be issued

    ISLAMABAD: Tax officials have been empowered to issue notices to taxpayers for filing income tax returns of past 10 years.

    Sources in Federal Board of Revenue (FBR) said that there are many cases had been identified where persons had accumulated assets and making huge amount transactions but not filing their income tax returns and wealth statements.

    The sources said that the tax authorities may invoke Section 114(5) of the Income Tax Ordinance, 2001 for the purpose to compel such persons to file their returns of past 10 years.

    The Section 114(5) of the Ordinance stated: “A notice under sub-section (4) may be issued in respect of one or more of the last five completed tax years or assessment years.

    “Provided that in case of a person who has not filed return for any of the last five completed tax years, notice under sub-section (4) may be issued in respect of one or more of the last ten completed tax years.”

    Sub-Section (4) of Section 114 of the Ordinance stated that subject to sub-section (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year or assessment year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Commissioner may allow.

  • Tax officials empowered to recover short payment without notice

    Tax officials empowered to recover short payment without notice

    KARACHI: Tax officials have been authorized to recover short payment of sales tax through freezing bank accounts of taxpayers without serving show cause notice.

    Officials in Federal Board of Revenue (FBR) said that the officers of Inland Revenue had been authorized to make recovery of short payment of sales tax as declared in return of a taxpayer by taking measures including freezing bank account without issuing a show cause notice.

    The officials said that under Section 11A of Sales Tax Act, 1990, the powers of Inland Revenue officers had been explained.

    Section 11A: Short paid amounts recoverable without notice

    Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made thereunder:

    Provided that no penalty under section 33 of this Act shall be imposed unless a show cause notice is given to such person.

  • Customs to secure deferential duty, taxes on provisional assessment

    Customs to secure deferential duty, taxes on provisional assessment

    KARACHI: Importers are liable to deposit bank guarantee against deferential amount assessed provisionally by customs authorities on those consignments, which required further examination.

    The Federal Board of Revenue (FBR) issued Customs Act, 1969 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019. The updated act explained through Section 81 the security of deferential amount in provisional determination liability.

    Section 81: Provisional determination of liability

    Sub-Section (1): Where it is not possible for an officer of Customs during the checking of the goods declaration to satisfy himself of the correctness of the assessment of the goods made under section 79 or 131, for reasons that the goods require chemical or other test or a further inquiry, an officer, not below the rank of Assistant Collector of Customs, may order that the duty, taxes and other charges payable on such goods, be determined provisionally:

    Provided that the importer, save in the case of goods entered for warehousing, pays such additional amount on the basis of provisional assessment or furnishes bank guarantee or pay order of a scheduled bank along with an indemnity bond for the payment thereof as the said officer deems sufficient to meet the likely differential between the final determination of duty, taxes and other charges over the amount determined provisionally:

    Provided further that there shall be no provisional assessment under this section if no differential amount of duty and taxes and other charges is paid or secured against bank guarantee or pay order.

    Sub-Section (2): Where any goods are allowed to be cleared or delivered on the basis of such provisional determination, the amount of duty, taxes and charges correctly payable on those goods shall be determined within six months of the date of provisional determination:

    Provided that the Collector of Customs or, as the case may be, Director of Valuation, may in circumstances of exceptional nature and after recording such circumstances, extend the period for final determination which shall in no case exceed ninety days:

    Provided further that any period, during which the proceedings are adjourned on account of a stay order or for want of clarification from the Board or the time taken through adjournment by the importer, shall be excluded for the computation of aforesaid periods.

    Sub-Section (3): On completion of final determination, the amount already paid or guaranteed shall be adjusted against the amount payable on the basis of final determination, and the difference between the two amounts shall be paid forthwith to or by the importer, as the case may be.

    Sub-Section (4): If the final determination is not made with the period specified in sub-section (2), the provisional determination shall, in the absence of any new evidence, be deemed to be the final determination.

    Sub-Section (5): On completion of final determination under sub-section (3) or (4), the appropriate officer shall issue an order for adjustment, refund or recovery of amount determined, as the case may be.

    Explanation.- Provisional assessment means the amount of duties and taxes paid or secured against bank guarantee or pay order.

  • FBR takes measures to improve trade facilitation in Balochistan

    FBR takes measures to improve trade facilitation in Balochistan

    KARACHI: Federal Board of Revenue (FBR) has taken measures to improve trade facilitation and curb smuggling in Balochistan. Accordingly a senior BS-21 officer of Pakistan Customs Service(PCS) has been specifically posted as Chief Collector, Balochistan with dedicated Collectorates for Enforcement and Appraisement.

    Model Customs Collectorate (Preventive), Quetta was established to curb the menace of smuggling. Dedicated anti-smuggling units have been set-up with the available manpower and logistics and tasked to man the long and porous Pak Afghan border.

    The FBR has also established Model Customs Collectorate, Appraisement Quetta to facilitate trade and to expedite customs clearances from dry port and customs border stations in Balochistan.

    On directives of Chairman FBR Syed Shabbar Zaidi, adequate staff has been posted in the far flung customs stations of Taftan, Panjgur and Chaman border in order to ensure immediate clearance of goods especially perishable items like dry / fresh fruits and vegetables and to ensure clearances through the WeBOC-Glo automated system.

    Member Customs Operations has instructed all customs formations operating in Balochistan to ensure speedy clearances while at the same time to curb the menace of smuggling and apprehend those involved in these illegal movement of goods.

  • Method of accounting for computing income tax

    Method of accounting for computing income tax

    KARACHI: Federal Board of Revenue (FBR) has said that a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.

    The FBR issued Income Tax Ordinance, 2001 updated till June 30, 2019 incorporating amendments made through Finance Act, 2019. The FBR explained method of accounting in Section 32 of the Ordinance.

    Section 32: Method of accounting

    Sub-Section (1): Subject to this Ordinance, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.

    Sub-Section (2): Subject to sub-section (3), a company shall account for income chargeable to tax under the head “Income from Business” on an accrual basis, while other persons may account for such income on a cash or accrual basis.

    Sub-Section (3): The Board may prescribe that any class of persons shall account for income chargeable to tax under the head “Income from Business” on a cash or accrual basis.

    Sub-Section (4): A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by order in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head “Income from Business”.

    Sub-Section (5): If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once.

    Section 33: Cash-basis accounting

    A person accounting for income chargeable to tax under the head “Income from Business” on a cash basis shall derive income when it is received and shall incur expenditure when it is paid.

    Section 34: Accrual-basis accounting

    Sub-Section (1): A person accounting for income chargeable to tax under the head “Income from Business” on an accrual basis shall derive income when it is due to the person and shall incur expenditure when it is payable by the person.

    Sub-Section (2): Subject to this Ordinance, an amount shall be due to a person when the person becomes entitled to receive it even if the time for discharge of the entitlement is postponed or the amount is payable by instalments.

    Sub-Section (3): Subject to this Ordinance, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy.

    Sub-Section (5): Where a person has been allowed a deduction for any expenditure incurred in deriving income chargeable to tax under the head “Income from Business” and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Business” in the first tax year following the end of the three years.

    Sub-Section (5A): Where a person has been allowed a deduction in respect of a trading liability and such person has derived any benefit in respect of such trading liability, the value of such benefit shall be chargeable to tax under the head “Income from Business” for the tax year in which such benefit is received.

    Sub-Section (6): Where an unpaid liability is chargeable to tax as a result of the application of sub-section (5) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.